Charlotte may be less susceptible to recession
With high inflation and rising interest rates, many economists are predicting the U.S. will see a recession in the next year. That’s the bad news. Now here’s the good news. If that happens, Charlotte would most likely fare better than other places. That’s according to a special report this week by The Charlotte Ledger Business Newsletter. For more on that and other business news, WFAE's Marshall Terry talks to the Ledger’s Tony Mecia for this week's BizWorthy.
Marshall Terry: Tony, we’ll get to why that is about Charlotte in a moment. First I want to point out that Bank of America, Wells Fargo, Truist and all of the other big banks report quarterly earnings in the next few days. And analysts are predicting some pretty big losses. Why is that?
Tony Mecia: Yeah, I think that banks, like a lot of businesses and like a lot of consumers are, you know, they're looking at the headlines and they're seeing some signs of weakness potentially approaching in our economy. And what the banks are doing is they're setting some money aside in case people default on their loans, in case things get bad and people can't repay what they owe to the bank, that they don't, that the banks are hurt by that. So, they're a lot of it is from setting aside money for loan reserves in case they go bad.
Terry: So, if indeed a recession were to occur, you talked to some economists who said Charlotte might actually be in better shape than other areas. Why is that?
Mecia: Yeah. This week I talked with three economists, Matt Martin of the Federal Reserve Bank of Richmond, Mike Walden of NC State and Mark Vitner of Wells Fargo. And each of them said that Charlotte looks to be in better shape at the moment with the way that the financial numbers are. Because we're getting a whole bunch of people moving here. Charlotte is like a lot of big cities in the South, a desirable place to live. It's more affordable than a lot of other places. And so that growth is bringing people here, people who spend money, people who are filling jobs. A lot of these people are college-educated professionals. They described it as being a little bit of a buffer between sort of the headlines you might see nationally about a recession or a downturn and what's actually going to happen here in Charlotte because we do have that growth. And so that is an engine of prosperity here. Now, growth obviously has some downsides. We're dealing with a lot of those, too. But overall, they said we should be in pretty good shape compared with the rest of the country.
Terry: Did they say if there are sectors of Charlotte’s economy that aren’t as strong and would take a bigger hit if indeed a recession happens?
Mecia: Yeah, I mean, a recession is a widespread economic downturn. And so it does vary by sector. You know, they did say if there is a national recession, Charlotte's not going to be immune from that. The types of industries that would be hit worst would probably be those tied to consumer spending, you know, luxuries, things people don't need. I mean, you just think about it in your own life. Marshall If you think that your personal circumstances are not going to improve, if you think you might lose your job, you're going to start belt-tightening, right? You're going to maybe make spaghetti and meatballs at home instead of going out to a steakhouse. So, you know, you think about the restaurant industry, the hospitality industry. Some of those might start paring back a little bit. I mean, that's not showing up in the data yet. Just to be clear, things are still looking good at the moment, but we're sort of we're forecasting here, we're looking ahead. And then the types of industries that might actually be okay would be ones that provide essential needs. You think of grocery stores, you think of health care. Those are probably going to be a little bit better. They're not as tied to the cyclical nature of the economy.
Terry: On to some development news now. The Ledger reports some residents in Charlotte’s Grier Heights neighborhood are opposing plans for a new Starbucks and Chick-fil-A. What’s their beef?
Mecia: What's their beef with Chick-Fil-A? That's what you're asking me. I see what you did there, Marshall. Yeah. Like a lot of places in Charlotte, when you have commercial development near a neighborhood, a lot of times the neighborhoods, they have some questions about that. And in particular, in Greer Heights, the concern is about traffic. I mean, we've all seen what happens when you open up a Chick-Fil-A. These things can be the victims of their own popularity. A lot of times you have cars that stretch out into the street. And also, you know, these residents said, look, we want something maybe that's a little bit better for our community, maybe a business incubator, you know, things that that the community really wants. And so their concerns about traffic, their concerns about safety in terms of where there can be more cars in the neighborhood. So it's just another example, Marshall of, you know, people in Charlotte with some concerns about how we're growing and about what's moving in next to them.
Terry: The Ledger this week reported students at UNC Charlotte’s School of Nursing are using robot patients to train. So how does that work?
Mecia: Yeah. You know, we talked with a nursing educator at UNC Charlotte who said that when she was getting taught, they would do things like, you know, learn to do injections by injecting oranges by citrus and. Now they have robots, then they can do all kinds of things. Marshall you know, they have a pulse, they can breathe, some of them or even can even be configured to give birth. And so it really helps nursing students practice on robot patients before they're exposed to actual live human patients in hospitals and elsewhere. So it's just sort of a modern way of training nurses.
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